FSI International, Inc. Announces Preliminary Fourth Quarter and Fiscal Year 2005 Financial Results.MINNEAPOLIS Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. -- The Company Ended the Year with $32 Million in Cash, Cash Equivalents and Marketable Securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has and Orders of $26 Million in the Fourth Quarter of Fiscal 2005 Increased as Compared to the Prior Quarter FSI FSI Foreign Service Institute FSI Fluid Structure Interaction FSI Fuel Stratified Injection FSI Federazione Scacchistica Italiana (Italian Chess Federation) FSI Free Standing Insert FSI Flight Simulator International, Inc. (Nasdaq:FSII FSII Fuel System Icing Inhibitor (MIL-I-27686) ), a manufacturer of capital equipment for the microelectronics microelectronics, branch of electronic technology devoted to the design and development of extremely small electronic devices that consume very little electric power. industry, today reported preliminary financial results for the fiscal 2005 fourth quarter and the fiscal year ended August 27, 2005. Fiscal 2005 Fourth Quarter and Full Year Results Fiscal year 2005 sales decreased 24 percent to $86.4 million, compared to $114.4 million for fiscal 2004. The Company's 2005 fiscal year preliminary net loss was $3.3 million, or $0.11 per share, compared to a net income of $141,000, or $0.00 per share for fiscal year 2004. Sales for the fiscal 2005 fourth quarter decreased 29 percent to $23.7 million, compared to $33.3 million for the same period of fiscal 2004. The Company's preliminary net loss for the fourth quarter of fiscal 2005 was $1.9 million, or $0.06 per share, as compared to net income of $3.2 million, or $0.11 per share in the fourth quarter of fiscal 2004. These results are preliminary and subject to change depending upon the completion of our audited statements. In particular, with respect to the Company's equity in earnings of its Japanese joint venture affiliate, m.FSI, LTD LTD 1 Laron-type dwarfism 2 Leukotriene D 3 Long-term depression, see there 4. Long-term disability , a reconciliation of m.FSI LTD's audited financial statements from Japanese GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). to United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. GAAP is being completed. In fiscal 2005, the Company accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. $250,000, or $0.01 per share, of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. judgment loss; recorded a $7.0 million, or $0.23 per share, gain on the sale of its Allen, Texas Allen is a city in Collin County and a northern suburb of Dallas, Texas (USA). As of the 2000 census, the city had a total population of 43,554. As of April 2007, the city's population is estimated at 77,465. facility; and recorded a $5.8 million, or $0.19 per share, gain on the distributions associated with Applied Materials' acquisition of Metron Technology N.V. In fiscal 2004, the Company accrued $3.4 million, or $0.11 per share, of patent litigation settlement costs and recorded a $2.0 million, or $0.07 per share, gain on the sale of Metron Technology N.V. stock. The litigation-related costs were included in selling, general and administrative expenses in both periods, and the Metron stock sales gains and gain on distributions were recorded in gain on marketable securities in both periods. "While weak industry conditions impacted our financial performance in fiscal 2005, we made good progress on the strategies we established at the beginning of the year," said Don Mitchell Don Mitchell may refer to:
--Expanding the process capabilities for our three flagship products A primary product of a company, which is typically why the company was founded and/or what made it well known. For example, MS-DOS, Windows and the Microsoft Office suite have been flagship products of Microsoft. CorelDRAW is a flagship product of Corel Corporation. ; --Gaining acceptance for products that were under evaluation by several customers; --Adding several leading semiconductor manufacturers to our product user base; --Selling our Allen, Texas facility; and --Settling all outstanding litigation. In addition, as a result of Applied Materials' acquisition of substantially all of the assets of Metron Technology, we were able to monetize Monetize 1. To convert into money. 2. To convert from securities into currency that can be used to purchase goods and services. Notes: For example, you'll often hear Internet marketers talk about "monetizing website visitors. our equity investment in Metron." Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. and Deferred Revenue The Company began fiscal 2006 with $19.3 million in backlog. Deferred revenue was $8.0 million at the end of fiscal 2005 and represented $4.8 million of deferred profit. Customers can cancel or delay orders; therefore backlog is not necessarily indicative of shipments or revenues in future periods. Balance Sheet Strength Cash, cash equivalents, restricted cash and marketable securities at year end were $31.9 million. The Company used $3.9 million in cash from operations in the fourth quarter of fiscal 2005. As of August 27, 2005, the Company had $65.6 million in working capital, a current ratio of 3.9 to 1 and a book value of $3.32 per share. Outlook "Recently we added another leading U.S. semiconductor manufacturer to our MAGELLAN(R) System customer base," continued Mitchell Mitchell, city (1990 pop. 13,798), seat of Davison co., SE S.Dak.; inc. 1881. Mitchell is a trade, distribution, and shipping center for a dairy and livestock area. . "We expect to ship this system late in the first quarter.(a) Also, in September we shipped a follow-on order to our other U.S. MAGELLAN system customer. However, we do not anticipate gaining acceptance for either of these systems in the first quarter of fiscal 2006," concluded Mitchell.(a) The Company expects first quarter fiscal 2006 orders to be between $22 to $26 million, as compared to $26.2 million in the fourth quarter of fiscal 2005.(a) This reflects the expected acceptance of products previously placed with customers for evaluation along with follow-on orders for these and other products.(a) Considering the backlog and deferred revenue levels at the end of fiscal 2005, the Company expects first quarter fiscal 2006 revenues to range from $16 to $19 million.(a) A portion of the expected revenue is subject to either receiving purchase orders or obtaining timely acceptance from the Company's customers. Based upon the gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. associated with deferred revenue, the expected manufacturing capacity utilization rate Capacity utilization rate The percentage of the economy's total plant and equipment that is currently in production. Usually, a decrease in this percentage signals an economic slowdown, while an increase signals economic expansion. , the product sales mix sales mix See product mix. and the current quarterly operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. run rate, the Company expects a loss in the $6.0 to $8.0 million range for the first quarter of fiscal 2006.(a) Fiscal 2006 first quarter capital expenditures are expected to be approximately $600,000, with depreciation and amortization expected to be between $900,000 and $1.0 million.(a) If the Company achieves its expectations, it anticipates using $4.5 to $5.5 million of cash in operations during the first quarter of fiscal 2006.(a) Conference Call Details Investors will have the opportunity to listen to the conference call at 3:30 p.m. CT today over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . The webcast is being distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at www.fulldisclosure.com, Thomson/CCBN's individual investor portal, powered by StreetEvents. Institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. can access the call via Thomson's password-protected event management site, StreetEvents (www.streetevents.com). For those who cannot listen to the live broadcast, a replay will be available shortly after the call. About FSI FSI International, Inc. is a global supplier of surface conditioning equipment In telecommunication, the term conditioning equipment has the following meanings:
1. the plunging of a body into a liquid. 2. the use of the microscope with the object and object glass both covered with a liquid. , spray, vapor vapor /va·por/ (va´por) pl. vapo´res, vapors [L.] 1. steam, gas, or exhalation. 2. an atmospheric dispersion of a substance that in its normal state is liquid or solid. and CryoKinetic technologies, customers are able to achieve their process performance, flexibility and productivity goals. The Company's support services programs provide product and process enhancements to extend the life of installed FSI equipment, enabling worldwide customers to realize a higher return on their capital investment. FSI maintains a web site at http://www.fsi-intl.com. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement Under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 This press release contains certain "forward-looking" statements ((a)), including, but not limited to, expected orders, expected revenues, expected net loss, expected capital expenditures, expected depreciation and amortization, expected cash usage, and other expected financial performance for the first quarter of fiscal 2006. Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. involving risks and uncertainties, both known and unknown, that could cause actual results to differ materially from those in such forward-looking statements. Such risks and uncertainties include, but are not limited to, the change in industry conditions; order delays or cancellations; general economic conditions; changes in customer capacity requirements and demand for microelectronics; the extent of demand for the Company's products and its ability to meet demand; global trade policies; worldwide economic and political stability; the Company's successful execution of internal performance plans; the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. nature of the Company's business; volatility of the market for certain products; performance issues with key suppliers and subcontractors; the transition to 300mm products; the level of new orders; the timing and success of current and future product and process development programs; the success of the Company's affiliated distributor in Japan; the success of the Company's direct distribution organization; legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. ; and the potential impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of long-lived assets; as well as other factors listed herein or from time to time in the Company's SEC reports including, but not limited to, the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the 2004 fiscal year and the Company's quarterly report on Form 10-Q Form 10-Q See 10-Q. for the third quarter of fiscal 2005. The Company assumes no duty to update the information in this press release.
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Fourth Quarter Ended Year Ended
--------------------- ---------------------
Aug. 27, Aug. 28, Aug. 27, Aug. 28,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Sales $23,702 $33,338 $86,370 $114,404
Cost of goods 12,838 15,557 46,376 55,384
-------------------------- ---------- ---------- ---------- ----------
Gross margin 10,864 17,781 39,994 59,020
Selling, general and
administrative expenses 8,782 9,346 35,291 39,547
Research and development
expenses 5,678 5,585 22,078 22,458
Gain on sale of facility --- --- 7,015 ---
-------------------------- ---------- ---------- ---------- ----------
Operating (loss) income (3,596) 2,850 (10,360) (2,985)
Interest and other income,
net 332 131 850 425
Gain on marketable
securities 1,598 --- 5,808 1,972
-------------------------- ---------- ---------- ---------- ----------
(Loss) income before
income taxes (1,666) 2,981 (3,702) (588)
Income tax expense 12 13 50 50
-------------------------- ---------- ---------- ---------- ----------
(Loss) income before
equity in (loss) earnings
of affiliate (1,678) 2,968 (3,752) (638)
Equity in (loss) earnings
of affiliate (217) 267 450 779
-------------------------- ---------- ---------- ---------- ----------
Net (loss) income ($ 1,895) $3,235 ($ 3,302) $141
-------------------------- ========== ========== ========== ==========
(Loss) income per share -
basic ($ 0.06) $0.11 ($ 0.11) $0.00
========== ========== ========== ==========
(Loss) income per share -
diluted ($ 0.06) $0.11 ($ 0.11) $0.00
========== ========== ========== ==========
Weighted average common
shares
Basic 29,826 29,791 29,928 29,792
Diluted 29,826 30,243 29,928 30,315
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands)
(unaudited)
Aug. 27, Aug. 28,
2005 2004
---------- ----------
Assets
------------------------------------------------
Current assets
Cash, restricted cash, cash equivalents and
marketable securities $31,880 $42,208
Receivables, net 24,896 22,272
Inventories 24,717 27,378
Other current assets 6,924 5,568
------------------------------------------------ ---------- ----------
Total current assets 88,417 97,426
Property, plant and equipment, net 21,556 30,918
Investment in affiliate 8,484 7,744
Intangible assets, net 1,784 2,057
Other assets 1,698 1,652
------------------------------------------------ ---------- ----------
Total assets $121,939 $139,797
------------------------------------------------ ========== ==========
Liabilities and Stockholders' Equity
------------------------------------------------
Current liabilities
Trade accounts payable $5,203 $9,470
Deferred profit(a) 4,788 3,096
Customer deposits 1,220 255
Accrued expenses 11,592 15,854
------------------------------------------------ ---------- ----------
Total current liabilities 22,803 28,675
Long-term liabilities 750
Total stockholders' equity 99,136 110,372
------------------------------------------------ ---------- ----------
Total liabilities and stockholders' equity $121,939 $139,797
------------------------------------------------ ========== ==========
------------------------
(a)Deferred profit reflects deferred revenue less manufacturing and
other related costs.
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
MISCELLANEOUS FINANCIAL INFORMATION
(in thousands, except percentages, per share and total employee data)
(unaudited)
Aug. 27, Aug. 28,
2005 2004
---------- ----------
Sales by Area
------------------------------------------------
United States 36% 53%
International 64% 47%
Cash Flow Statement
------------------------------------------------
Capital expenditures $1,754 $1,723
Depreciation 3,630 5,654
Amortization 783 2,266
Miscellaneous Data
------------------------------------------------
Total employees, including contract 486 508
Book value per share $3.32 $3.69
Shares outstanding 29,874 29,942
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